Eye of the storm
I was in a hurricane once when I lived on Long Island. Hurricane Bob in 1991. While it was not a major Hurricane, it was one of the costliest in New England history. I remember watching the trees thrash about for hours and then suddenly it was calm, and the sun came out. We were in the eye of the storm. It is deceptive at best because you do not know exactly how long it will take for the eye to pass over. This time it was about 20 minutes and then the winds shifted around, and the trees started thrashing and crashing. Generally, this can be the most dangerous part of the storm because the trees have been weakened in one direction and now forced in the opposite direction pulls them from their roots.
I fear we are in the eye of the economic storm that is 2020. The stock market has rebounded, some jobs have come back, the sun is out and it is warm again. It’s so easy to get lulled into complacency when you are in the eye of the storm. But this storm is not over yet. Please use this time wisely to batten down the hatches and prepare for the back end of the storm.
What should you be doing?
Make sure you have your emergency savings built up. If you are still employed, it is wise to have 3-6 months in savings. Retirees on a fixed income might not need as much because their income should not be affected, but additional savings could ensure peace of mind.
Monitor your spending. I know I have saved a lot in incidental expenses during the quarantine by not having regular haircuts or nail services, but other expenses have crept up.
Do I really need all these streaming services for entertainment? Time to cut a few out. Check your insurance coverage. The recent auto reform allows you to save some significant money on your insurance. Every dime you do not send to the insurance company is money that can go toward your financial goals.
Perhaps you are laid off now. This could be a good time to take an online course to update your job skills. If history is a guide, many people do not get called back after being laid off. Learning some new skills or certifications can make you more employable when the storm is over.
This is a great time to review your portfolio and make sure it is balanced for your risk tolerance and long-term needs. If you were completely panicking in March when the stock market was down 35% this might be a good time to realign your portfolio to something a bit less risky.
Right after Hurricane Bob passed over us, we rushed to the harbor to see what had happened to all the boats. Most were piled tragically up on the shore. They had been pulled from their moorings or their anchor lines snapped. However, there were a few in the harbor safe and sound because their owners had the right anchors and moorings to survive the storm. Make sure you do too.